Retailers record best sales for more than a year

CBI sees first rise in high street sales since early 2008

UK retailers posted a surprise increase in sales in the first half of April – the first uplift for more than a year – in a further sign that trading conditions are improving on the high street.

The CBI's Distributive Trades Survey revealed that 44 per cent of retailers posted higher sales volumes in the first half of April, compared with the same period last year, while 41 per cent said that sales had fallen.

The net balance of 3 per cent delivering growing sales was the highest figure since January 2008. It also supports data unveiled earlier this month by the department store Debenhams and the chocolatier Thorntons, which both returned to underlying sales growth recently.

Andy Clarke, the chairman of the CBI Distributive Trades Panel and Asda's chief operating officer, said: "The good turnout by shoppers over this year's later Easter may well have influenced the April retail figures, and while they mark a respite they should not be taken as an indication of a high street revival. With unemployment rising and growth in average earnings down, consumers remain very wary, and retailers themselves think that sales will drop again in May."

While retailers were boosted by the sunny weather and the Easter bank holiday, the uplift in sales was also widely unexpected given that a balance of 41 per cent of retailers had forecast sales volumes would be down between 1 April and 15 April, revealed the CBI.

In April, all food retailers delivered rising sales volumes and a net balance of 58 per cent of footwear and clothing were also in positive territory, but all other sectors posted a decline in sales.

The worst performing sector was durable household goods, with a net balance of 87 per cent of retailers reporting declining sales in the first half of April, while sales also fell at a balance of 48 per cent of furniture retailers. Booksellers and stationers also endured a torrid start to the month as a net balance of 67 per cent said that sales fell.

However, while April's retail sales volumes represent a marked improvement on the net balance of 44 per cent of those surveyed posting falling sales in March, a balance of 15 per cent of retailers still expect sales to fall in May. Over the past three months, a net balance of 22 per cent of retailers said sales declined.

Barry Knight, the head of retail at Smith & Williamson, the UK accountancy firm, said the CBI data was good news, but warned: "I still think it is far too early to say 'we are in green shoots territory'. So many other factors are going to come into play, such as house prices continuing to decline, unemployment still being nowhere near its peak and the impact of the weak pound, which I think will lead to retailers having to increase prices".

Industry experts expect further restructuring activity in the retail sector over the coming months, as store groups battle hefty debts, the scaling back of their suppliers' credit insurance and wafer-thin margins. Given this backdrop, Smith & Williamson has teamed up with GA Asset Advisors, a subsidiary of the US turnaround specialist Great American Group, to enter the market for providing troubled UK retailers with operational and financial restructuring.